Thadden, Ernst-Ludwig von; Berglöf, Erik; Roland, Gérard - In: Review of Financial Studies 23 (2010) 7, pp. 2648-2679
This article integrates the problem of designing corporate bankruptcy rules into a theory of optimal debt structure. We show that, in an optimal contracting framework with imperfect renegotiation, having multiple creditors increases a firm's debt capacity while increasing its incentives to...